Quarterly Economic Growth Release: 5.4% Q12025
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Policy rate views: Uncertainty stalls cuts
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Inflation Update: BSP poised for a string of rate cuts as inflation cools
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The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
Your Morning Fix
- Meralco announced a decrease in electricity rates for May, lowering the overall rate by PHP 0.7499 per kilowatt-hour, driven by lower generation and transmission costs.
- The Philippine Chamber of Commerce and Industry urges the new Congress to pass economic measures that enhance business competitiveness, including extending MSME loan allocations and strengthening the oversight on international shipping charges through the proposed International Maritime Trade Competitiveness Act.
- The Philippine government is considering seasonal tariffs on rice imports to stabilize farmers’ incomes and market prices, following a proposal from the Federation of Free Farmers
- The Bank of Japan remains committed to its rate hike stance, expecting wage and price rises despite US tariff uncertainty. Deputy Governor Shinichi Uchida said tariffs may slow growth, but the BOJ will raise rates if economic conditions improve.
- US consumer prices rose modestly in April at 2.3%, marking the smallest annual increase in four years, though inflation remains uncertain amid new tariffs.
Our Portfolio Recommendation
For the peso portfolio, we recommend a neutral 50-50 split between fixed income and equities. While the Bangko Sentral ng Pilipinas and US Fed rate cuts support risk assets, potential headwinds from tariffs and market volatility may call for a balanced approach to capture fixed income gains while maintaining equity exposure. In the dollar portfolio, we are adjusting our earlier guidance for 2Q 2025. We recommend a shift to 60% fixed income and 40% equities, reflecting a more defensive stance. This revision considers the potential downgrade in growth and earnings outlook following the recently announced reciprocal tariffs.
| 2025 Metrobank Forecast | 2026 Metrobank Forecast | 2027-2029 Metrobank Forecast | |
|---|---|---|---|
| GDP | 5.7% | 6.1% | 6.0% |
| Inflation | 2.2% | 3.3% | 3.0% |
| BSP Target Reverse Repurchase Rate | 4.75% | 4.25% | 5.00% |
| Federal Funds Rate | 4.00% | 3.50% | 4.00% |
| USD/PHP | 56.9 | 57.7 | 55.0 |
CHART OF THE DAY
Chart of the Day
US headline CPI cools amid steady rates
US inflation rose less than expected in April, with the core consumer price index (CPI) increasing 0.2% from March and 2.3% year-on-year. While some commodities saw either lower prices or a slower rise in prices, furniture and appliances—mostly imported goods—experienced price hikes. The Federal Reserve is keeping interest rates steady due to ongoing uncertainty about tariffs, which, despite rollbacks on some Chinese imports, continue to weigh on businesses. Companies may be holding off on price increases as they work through existing inventory, but concerns remain about potential future tariff hikes. Source: Bloomberg
Featured Reports
More Reads
USD/PHP closes higher following dollar rally
- The USD/PHP exchange rate opened 30 centavos higher at 55.80 on Tuesday, tracking the dollar rally after US President Donald Trump pulled back on tariffs against China.
- Fading interest immediately caught this pop, with a stronger onshore Chinese yuan fixing helping stabilize Asian currencies.
- The local pair grinded to lows of 55.58, but the lack of follow-through caused an extended short squeeze.
- The USD/PHP exchange rate ultimately closed at 55.795, or 18.5 centavos higher day-on-day.
- The current support levels of USD/PHP are at 55.20/30 while the resistance levels are at 55.80/90.
READ MORE
Local yields rose amid US Treasury selloff
- Local yields rose as US-China trade war tensions eased and US Treasuries sold off on Tuesday, leading to local benchmark bonds selling off by up to 7 basis points (bps).
- Fixed Rate Treasury Note (FXTN) 10-73 was the most actively traded security, reaching 6.24% intraday before settling at 6.22%, with broad selling interest seen across the curve.
- Shorter-dated bonds outperformed, particularly Retail Treasury Bond 5-18, which saw two-way demand around 5.79%.
- Most bonds ended 2 to 5.5 bps higher, reflecting broad profit-taking and cautious sentiment across the market.
- Market participants focus on today’s dual-tranche auction for the 3- and 20-year bonds.
READ MORE
PSEi breaks the 6,500-resistance level
- The Philippine Stock Exchange index (PSEi) ended 108.62 points higher at 6,566.82 on Tuesday, driven by improved regional sentiment and renewed optimism surrounding global trade, as investors see tensions easing between the US and China.
- Sectoral performance was largely positive, with Services (+2.48%) and Holding Firms (+1.96%) leading the gains, while Mining & Oil (-1.34%) was the lone laggard.
- Among the top movers were International Container Terminal Services Inc. (+5.71%), Century Pacific Food Corp. (+5.00%), and Manila Electric Co. (+4.17%).
- Meanwhile, China Banking Corp. (-3.67%), Puregold Price Club Inc. (-2.97%), and Monde Nissin Corp. (-2.71%) led the day’s laggards.
- Market participants also positioned ahead of MSCI rebalancing announcement and digested key corporate earnings releases, which provided additional fuel for Tuesday’s activity.
READ MORE
USD/PHP closes higher following dollar rally
- The USD/PHP exchange rate opened 30 centavos higher at 55.80 on Tuesday, tracking the dollar rally after US President Donald Trump pulled back on tariffs against China.
- Fading interest immediately caught this pop, with a stronger onshore Chinese yuan fixing helping stabilize Asian currencies.
- The local pair grinded to lows of 55.58, but the lack of follow-through caused an extended short squeeze.
- The USD/PHP exchange rate ultimately closed at 55.795, or 18.5 centavos higher day-on-day.
- The current support levels of USD/PHP are at 55.20/30 while the resistance levels are at 55.80/90.
READ MORE
Local yields rose amid US Treasury selloff
- Local yields rose as US-China trade war tensions eased and US Treasuries sold off on Tuesday, leading to local benchmark bonds selling off by up to 7 basis points (bps).
- Fixed Rate Treasury Note (FXTN) 10-73 was the most actively traded security, reaching 6.24% intraday before settling at 6.22%, with broad selling interest seen across the curve.
- Shorter-dated bonds outperformed, particularly Retail Treasury Bond 5-18, which saw two-way demand around 5.79%.
- Most bonds ended 2 to 5.5 bps higher, reflecting broad profit-taking and cautious sentiment across the market.
- Market participants focus on today’s dual-tranche auction for the 3- and 20-year bonds.
READ MORE
PSEi breaks the 6,500-resistance level
- The Philippine Stock Exchange index (PSEi) ended 108.62 points higher at 6,566.82 on Tuesday, driven by improved regional sentiment and renewed optimism surrounding global trade, as investors see tensions easing between the US and China.
- Sectoral performance was largely positive, with Services (+2.48%) and Holding Firms (+1.96%) leading the gains, while Mining & Oil (-1.34%) was the lone laggard.
- Among the top movers were International Container Terminal Services Inc. (+5.71%), Century Pacific Food Corp. (+5.00%), and Manila Electric Co. (+4.17%).
- Meanwhile, China Banking Corp. (-3.67%), Puregold Price Club Inc. (-2.97%), and Monde Nissin Corp. (-2.71%) led the day’s laggards.
- Market participants also positioned ahead of MSCI rebalancing announcement and digested key corporate earnings releases, which provided additional fuel for Tuesday’s activity.
READ MORE